Norwegian aluminum group Hydro has sold its rolling division, mainly present in Germany, to financial investor KPS Capital Partners.
U.S. investor KPS Capital Partners is acquiring Norsk Hydro's global aluminum rolling business for EUR 1.38 bn. Completion of the transaction is expected mid-year 2021 and is subject to customary closing conditions and approvals.
The Company is one of the largest global manufacturers of aluminum rolled products, serving customers across a diversified set of end-markets including beverage can, automotive, foil packaging, and building and construction. The Company's assets consist of seven manufacturing facilities and one R&D center across Germany and Norway, including Alunorf, the world's largest aluminum rolling mill, and Grevenbroich, the world's largest rolled aluminum finishing mill. The Company employs approximately 5,000 employees mainly in Germany and Norway. The rolling business is to be continued under the new owners.
Hydro's aluminum rolling division generates too little return on investment
Hydro President and CEO Hilde Merete Aasheim pointed out in an interview with the Reuters news agency that the rolling division had only generated a return of 3.3 % on capital employed since 2015. This is too low, she said, adding that the group-wide target is 10 %. The sale to KPC is a "good solution both for Hydro and for the employees in Rolling, who will continue their efforts and further growth in a new, focused downstream company," Aasheim added.
US investor KPS Capital Partners focuses on innovation and development
Michael Psaros, Co-Founder and Co-Managing Partner of KPS, said, "The size and global scale of the Rolling business, the quality of its assets, coupled with the breadth of its products and technology capabilities, form the foundation of a tremendous investment platform. KPS Partner Kyle Mumford will lead a KPS team who will work closely with the Company's management team to accelerate growth opportunities driven by substantial investment in the Company's assets and operations. Our focus will be on innovation and new product development. We look forward to creating value by leveraging KPS' very successful, multidecade experience investing in the metals and automotive industries."
Independence holds great opportunities
Einar Glomnes, Executive Vice President of Rolling said, "We are excited to operate under KPS' ownership as an independent company. This is a great day for all stakeholders of our Rolling business, especially our customers and employees. KPS has a demonstrated track record of creating and building industry-leading companies, and has enjoyed tremendous success investing in the metals and automotive industries. KPS' global reach, commitment to manufacturing excellence and safety and significant financial resources will enable our company to accelerate growth and invest in industry-leading technologies, while maintaining our focus on quality and customer service."